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National Insurance contributions

Your National Insurance bill depends on how much you earn, and how you earn it - find out who pays what.

In this article
What are National Insurance classes? National Insurance contributions for employees  Self-employed National Insurance contributions Voluntary Class 3 contributions
Student National Insurance contributions  Low-earners and National Insurance National Insurance credits National Insurance in retirement 

What are National Insurance classes?

Workers make contributions to National Insurance in different ways depending on how they are employed and what they earn. These categories are known as 'classes.'

In the table below, we explain the different National Insurance classes, including who needs to pay what, and how payment is collected.

 

National Insurance contributions for employees 

Employees and most agency workers make Class 1 contributions, collected via PAYE together with their income tax. 

In 2018-19 you'll pay 12% of anything you earn between £702 and £3,863 per month, and 2% on anything higher.

That roughly means you'll pay 12% on earnings above £8,424 and £46,356, and 2% on anything more.

But because it's NI is calculated monthly you could end up paying more on irregular income such as bonuses. 

On top of this, employers also make contributions on their workers' income, generally of 13.8% of earnings above £702 per month. 

Find out more: National Insurance rates - what you'll be charged in 2017-18 and 2018-19.

Self-employed National Insurance contributions

If you're self-employed, you normally pay Class 2 National Insurance contributions and usually Class 4 NICs as well. 

You'll owe Class 2 contributions if you earn more than £6,205 profits per year, which are charged at £2.95 per week, or £153.40 for the year. 

You'll pay Class 4 contributions on profits above £8,424 per year at 9%.

This rate falls to 2% on profits above £46,350 per year, in a similar fashion to Class 1 contributions for employees. 

Voluntary Class 3 contributions

Class 3 National Insurance contributions are those that you can pay voluntarily. You may opt to do this if you have gaps in your record from previous years.

These will cost you £14.65 per week in 2018-19, or £761.80 for the year. 

Student National Insurance contributions

You don't start paying National Insurance until you're over 16 years old. Students who are older than this are not exempt. If they earn enough, they pay like any other worker.

If students don't do paid work, they are not credited with NICs for the years they are studying.

This creates a 'gap' in their contributions record, though most will still work for enough years after qualifying to merit a full state pension.

 Low-earners and National Insurance

You don't have to pay National Insurance if you earn below a certain amount. In 2018-19, this is £8,424 (while in 2017-18, it was £8,164).

The same applies if your self-employed profits are very low – below £6,025 in 2017-18.

But you should consider making voluntary Class 3 contributions, as extensive gaps in your record may deprive you of some benefits.

Find out more: National insurance and benefits - which benefits are linked to each type of contributions? 

 

 

National Insurance credits

There can be gaps in your contributions record if you don't pay National Insurance but, in many circumstances, you'll be 'credited' with contributions by HMRC.

National Insurance credits can help you qualify for certain contributory benefits, such as basic state pension, and payments if you're unemployed or unable to work due to illness. 

To find out more, read our guide to National Insurance credits for a detailed explanation of who is entitled to them

National Insurance in retirement 

You no longer have to pay National Insurance once you reach the state pension age (currently 65 for men and increasing to 65 for women by November 2018), even if you carry on working beyond this. 

Once you reach this age, there may be steps you can take to top-up your state pension, if you haven't reached the full 35 years' contributions to earn the maximum. 

Find out more: how do I qualify for state pension? – the criteria you need to meet